Top Cocoa Growers Yet to Reach Deal Amid Price Plan Changes
(Bloomberg) -- The world’s largest cocoa growers failed to reach an agreement with traders and chocolate makers on a new pricing system after making changes to a plan presented in June.
Industry regulators from Ivory Coast and Ghana told cocoa buyers at a meeting in Abidjan on Wednesday that they seek a premium of $400 per ton over the futures market as a so-called living-income differential, Fiifi Boafo, a spokesman for Ghana Cocoa Board, said by phone on Thursday. The regulators previously proposed a differential that will apply proportionally when prices fall below $2,600 per ton.
The parties are yet to reach an agreement on the new proposal, according to three people familiar with the matter, who asked not to be identified because they’re not authorized to speak publicly.
“I cannot say that everyone was in agreement but that position is what we made everyone to understand,” said Boafo. “That was what was understood by all.”
Cocoa futures settled at $2,433 a ton in New York on Wednesday. U.S. markets were closed on Thursday for the Independence Day holiday.
- Ghana and Ivory Coast aim to pay farmers 70% of a price of $2,600 per ton.
- Buyers will also have to pay a premium related to the origin of the beans, on top of the living-income differential, according to the people familiar. Cocoa from the two countries usually command a premium to the futures price, with Ghana’s usually higher due to better quality.
- When the total sales price exceeds $3,000 a ton, the excess will go into a stabilization fund to help finance the farmer price.
- Money can be withdrawn from the stabilization fund when futures fall below a level that would allow regulators to achieve the price they intend to pay growers.
- The move comes as the two nations, which produce more than 60% of the world’s cocoa supplies, try to assert more control over prices.
- The change of heart meant buyers have yet to agree to the new rules proposed.
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